Vilfredo Pareto? Like Quasimodo might say, the name rings a bell. A
fundraiser should know who he was!
was the Italian economist who, in 1895, conceived the idea that 80
percent of the wealth and property in Italy was owned by 20 percent
of the inhabitants. Theorizing that it may be natural law, he
proposed we could find this ratio in many situations throughout the
Duszynski penned a whimsical article in ResumeLab, a
digital online publication, in which he described various fields in
which this principle appears to apply. He wrote on April 14,
originally the Pareto principle referred to the distribution of
wealth, it can be applied to a wide variety of contexts, for
80% of tax money comes from about 20% of society.
Management—where 80% of the effect results from 20% of the
get 80% of their income from 20% of their customers.
80% of system crashes are caused by 20% of bugs.
list goes on and on….”
purposes, it is significant to note that in fundraising, 80% of
gifts come from 20% of major donors. In recent years, about 10% of
contributors have contributed 90% of donations, according to some
a firm understanding of this is relevant given the possibility that
we may be in a recession or on the verge of one at the moment. The
impact on fundraising can be enormous, and how nonprofits raise
funds could dictate their survival.
let’s define a recession.
that “Recessions are sometimes defined as two consecutive quarters
of decline in real Gross Domestic Product (GDP).” In the same June
16, 2022 article, the National Bureau of Economic Research (NBER)
defines a recession as “a significant decline in economic activity
that is spread across the economy and lasts more than a few
months.” It goes further and adds that recessions are based on
indicators including GDP, payroll employment, personal income and
spending, industrial production, and retail sales.” It is believed
that the U.S. has suffered through fourteen recessions since the
to a blaring headline in the June 29, 2022 issue of
Forbes, the “U.S. Economy Shrank Worse-Than-Expected
1.6% Last Quarter as Recession Fears Grow.” Economic forecasters
expect the country to contract further in the second quarter or, at
minimum, increase insignificantly. It’s not looking good.
maintain that, regardless, fundraising rebounds after downturns,
and in general quite well. In my new book “Learn From My
I explain four such occurrences—the 1987 financial crash,
9/11/2001, the 2008 Great Recession and housing collapse, and the
COVID-19 pandemic. What concerns us is that during a national
fiscal crisis, nonprofit fundraising more often than not is in
by the Russell Sage Foundation and The Stanford Center on
Poverty and Inequality in 2012 analyzed the Great Recession
of 2008-2009. According to this analysis, “…the economic downturn
of 2008 has given rise to one of the largest year-over-year
declines in charitable giving since the late 1960s. Total giving in
2008 fell by 7 percent in inflation-adjusted dollars, from $326.6
billion to $303.8 billion. In 2009, matters worsened, with
charitable giving dropping another 6.2 percent to approximately
$284.9 billion.” Similar cases can be made for other recessions, as
well. See the chapter in my book entitled, “Is There a Link Between
the Economy and Fundraising.”
just learned in a new article by The Fundraising
Effectiveness Project, “The 2022 First Quarter
Fundraising Report compares charitable giving in the first
quarter of 2022 to the first quarter of 2021. The report found that
the number of donors decreased by 5.6%, and the donor retention
rate, the percentage of donors who gave in 2021 and then gave again
in 2022, decreased by 6.2% year-over-year.” Time to buckle in your
you are a not-for-profit organization and you know what’s coming,
what is your strategy to counteract difficult times?
blog by The Better Fundraising Co. in September 2020
when we were in the throes of COVID-19, the author states, “The
organizations that make the most of this reality (especially this
year) are the ones who intentionally prioritize those donors with
how they spend their fundraising time and budget.” What held during
the early stages of the pandemic a fortiori holds truer now as we
cross the threshold into an uncertain financial phase.
should be your emphasis on the 20%, or even 10%, that bring in
80-90% of funds. Think major gift donors. This strategy is
not intended to the detriment of your overall campaign, just a
shifting of priorities.
for Good, a
company that provides cutting-edge donor software posted online ten
strategies to help nonprofits weather the confluence of factors
causing these hard times—what I refer to as “The Perfect Storm.”
Their recommendations are sound advice and can be found at this
Practice gratitude. Send your donors a video showing them
how their gift makes a difference.
Keep in touch. This isn’t the time to stay away. There are
many ways to communicate. Do so.
Start at the top. This might be a good time for a matching
Focus on recurring giving. Monthly and regular gifts can be
promoted for ongoing revenue streams.
Check the expiration dates. This may be a good time to
discontinue activities that are out of date or no longer
Identify Plans B, C, and D. You might be able to
sublet space, sell off equipment or start a new social
Collaborate to raise money. Consider partnering with another
nonprofit on an event. There is strength in numbers.
Be realistic. Scale back on campaigns best done during
Avoid emergency solicitations. No one wants to be on a
sinking ship. These drives can do more harm than help.
Get social. This would be a good time to engage your
constituents on social media.
Koch in his book The 80/20 Principle: The Secret to Achieving
More with Less puts it best:
change the way that we think about external events, even where we
cannot change them. And we can do something more. We can
intelligently change our exposure to events that make us either
happy or unhappy.”
Norman B. Gildin. All rights reserved.